HSBC's announcement that it is to offer its two year fixed Rate Matcher Mortgage deal to new customers from April 14 could see the world's largest bank increase its 'underweight' position in UK mortgages, according to experts.
Currently, HSBC, which is one of the 'big five' banks in the UK, has just 3.6 per cent of the UK mortgage
market, and Moneysupermaket.com's Louise Cuming says this latest move could help increase this share.
"For the size and stature of HSBC, it's absolutely punching below its weight," she told Reuters. "This will buy them market share very quickly ... It's a bit of news that I don't think any other lender can afford to follow."
The credit crisis has seen other lenders withdraw hundreds of deals form the market, and on Monday, Abbey became the final lender to pull 100 per cent mortgage deals – the highest LTV available to UK borrowers is now 95 per cent.
Fixed rate deals are also becoming more difficult to get hold of, with most lenders charging interest rates of at least 5.5 per cent for shorter term fixed rate deals and imposing fees that run into the thousands.
But it seems HSBC, which has been less affected than its rivals by the current financial turmoil thanks to its big retail deposit base and Asian business, is really bucking the trend with this new offer, which offers to match rates as low as 4.54 per cent. The Rate Matcher Mortgage has been available to HSBC customers since February, but from next week, it will also be open to new customers.
The offer will only be available for five weeks; to qualify for the deal, applicants must be on a fixed rate mortgage that ends before the end of June. Homeowners will also have to have a loan-to-value of 80 per cent or less to qualify for the HSBC Rate Matcher Mortgage
and pay a variable fee of up to £5,000, dependent on the loan size and interest rate agreed, although HSBC has estimated a maximum fee of £999 for around 75 per cent of customers.
"This clever move will enable HSBC to dwarf lending by its competitors in the short term and underlines its determination to become a major player in the mortgage market," continued Ms Cuming.
"This is a bold decision in the current environment…However, when an offer looks too good to be true, it usually is - HSBC requires a deposit of at least 20 per cent and will only accept applicants that fit strict criteria. Overall though, this is a short term marketing triumph. Amidst the credit crunch gloom, this will seem like a lifeline for many homeowners and undoubtedly the bank will be deluged with enquiries."